South Korea to Introduce Blockchain-Based Tokens for Government Expenditure in Q4

The South Korean Ministry of Economy and Finance is set to launch a pilot program in the fourth quarter to test the use of blockchain-based deposit tokens for government expenditure, as part of a broader effort to modernize public fund management. According to local media reports, the pilot program has been approved under the 2026 regulatory sandbox initiative, allowing for the use of digital currency to disburse Treasury funds. This move will enable the use of tokenized deposits to pay for business promotion expenses, which are currently processed using government purchasing cards. By doing so, the government is altering a long-standing system governed by the Treasury Funds Management Act, which previously required card-based payments. The new system will enable agencies to operate outside the existing rules on a limited basis, testing new methods in a sandbox environment. Officials anticipate that the introduction of token-based payments, which can be programmed with specific conditions such as spending limits and industry restrictions, will enhance oversight and reduce the need for manual audits. Additionally, the removal of intermediaries such as card networks is expected to lower transaction fees for small businesses receiving government payments. This initiative marks the second instance of deposit tokens being used in Treasury operations, following a previous pilot program related to subsidies for electric vehicle-charging infrastructure. The trial is scheduled to take place in Sejong City, with participating firms to be selected through a formal process. If the program demonstrates improved control over spending and yields measurable cost savings, the ministry plans to expand it further.